Description

BSE announces movement of 10 securities into higher GSM stages (II, III, and IV) as part of enhanced surveillance framework.

Summary

BSE has announced the movement of 10 securities into higher stages of the Graded Surveillance Measure (GSM) framework. One security is moving to Stage II, two securities to Stage III, and seven securities to Stage IV. The GSM framework applies enhanced surveillance and trading restrictions to securities that exhibit abnormal price movements or other concerning patterns.

Key Points

  • 1 security moving to GSM Stage II: Sadbhav Engineering Ltd
  • 2 securities moving to GSM Stage III: Procal Electronics India Ltd, KLG Capital Services Ltd
  • 7 securities moving to GSM Stage IV: Kartik Investments Trust Ltd, Wardwizard Healthcare Ltd, N2N Technologies Ltd, Standard Shoe Sole and Mould (India) Ltd, Ace Engitech Ltd, Progrex Ventures Ltd, Advik Laboratories Ltd
  • Higher GSM stages typically involve stricter trading restrictions including additional margin requirements and reduced position limits
  • Securities may move to lower GSM stages if included in ESM (Enhanced Surveillance Measure) or IBC (Insolvency and Bankruptcy Code) frameworks

Regulatory Changes

The GSM framework is a progressive surveillance mechanism where securities move through different stages (I, II, III, IV) based on market behavior. Each progressive stage involves:

  • Increased surveillance by the exchange
  • Higher margin requirements for traders
  • Reduced position limits
  • Additional disclosures and monitoring
  • Trade-for-trade settlement (no intraday trading) in higher stages

Compliance Requirements

  • Market participants must comply with revised margin requirements for affected securities
  • Position limits must be adjusted as per the new GSM stage specifications
  • Brokers should inform clients about the enhanced surveillance status
  • All trades in Stage IV securities will be on a delivery basis (trade-for-trade)
  • Settlement will be on T+1 basis with no netting off of positions

Important Dates

  • Effective Date: As per the circular dated December 23, 2025
  • Implementation: Immediate effect from the date of circular

Impact Assessment

Market Impact: The movement to higher GSM stages will result in reduced liquidity for these securities as trading restrictions increase. Speculative trading activity will be curbed, and only delivery-based transactions will be permitted in Stage IV securities.

Investor Impact: Investors holding these securities will face higher margin requirements and cannot engage in intraday trading for Stage IV securities. This may lead to reduced trading volumes and wider bid-ask spreads.

Operational Impact: Brokers and trading members must update their systems to enforce the new margin requirements and position limits. Risk management systems need to be adjusted to reflect the enhanced surveillance status of these securities.

Impact Justification

Affects 10 securities moving to higher GSM stages with increased surveillance and trading restrictions, impacting liquidity and investor participation